This midcap IT stock upgraded to 'overweight'; offers potential upside of 20%

KPIT Technologies shares gained 1 per cent (October 3) as the midcap IT stock has been upgraded to overweight from the earlier neutral call by JP Morgan. The brokerage has raised the target to Rs 2,000 from the earlier Rs 1,700 per share.

At the last count, shares of the IT major gained 0.7 per cent to Rs 1,683 per share on the BSE.

The new target implies 20 per cent potential gains. The stock has been underperforming over the past month and quarter (down 8 per cent and 3 per cent) amid negative news flow concerning electric vehicles (EVs) as global OEMs push out EV targets.

JP Morgan also maintained that few of the company's top clientele BMW, Honda and Renault have so far not announced any scale-back of EV plans. Major auto companies including BMW and Honday have continued with their 50 per cent/40 per cent EV penetration targets by 2030. 

KPIT Tech's EV exposure is 20 per cent with rest coming from  Advanced Driver Assistance Systems (ADAS) & connected vehicles where strong spends continue.

The brokerage has upgraded the revenue by 1-2 per cent and margins by 20-30 bps.

Meanwhile, Goldman Sachs has maintained its buy call on the stock with the target at Rs 2,200, while HSBC has maintained hold call with the target slashed to Rs 1,900 apiece.
 

KPIT Tech share price

The stock in the last one year has gained over 45 per cent, while Nifty IT index during the same time has climbed 33 per cent.